Sunday, September 23, 2012

The Art of the Long View

I would like to write what I heard from and learned through a book authored by Peter Schwartz, an amazing futurist I met at Summer Davos. The gray-hair guy whose face is always full of beaming smile gave me great implications for thinking about the future.

1. Why we need scenario
Scenario is a tool for ordering one’s perceptions about alternative future environments in which one’s decisions might be played out. Scenario writing is not for the prediction about the future, but for the good preparation for the uncertain future. In the real world, we don’t know ahead of time which scenario would take place. However, if we prepare for all scenarios and train ourselves, we will be able to deal with the situation better.

In a sense, scenario works as a vehicle for helping people learn. Granted, we can learn or prepare for the future even without scenarios, but we might need to take a look at pitfalls of human cognitive behavior - we human beings tend to deny the possibility of unwanted future, and developing scenarios are useful tools to avoid missing important factors.

2. How to make scenarios

Alternate focus of questions
Scenario builders should consider both narrow questions related to specific situations and broad ones the world at large. Otherwise, it’s easy to lose sight of issues that could be important.

Think with groups
If you think about the future, it is easy to be caught by one’s mental cycle. Discussing the questions with diverse people help us avoid failures.

See interactions between driving force and status quo
The world evolves through the dialectic process of something new and old. Schwartz mentioned about key sources of the driving forces that shape the new world, which he call “STEEP”:

- Society: Changes in the society could affect the future state of the world. Population growth, literacy rate, cultural diversity, etc need to be taken into considerations

- Technology: This force is one of the most important driers of future events. Politics can change, but a scientific innovation, once released into the world, cannot be taken back

- Economy: Economic phenomena do shape the future as well. The change in transportation costs changed the state of oil industry, for example. Fiscal deficit of developed countries would be the recent powerful driving force to influence the future of the world

- Environment: The impact of ecological damage on human affairs and the increasing public perception of ecological harm will have impact on the state of the future

- Politics: Regulations and foreign affairs do affect the state of the world.

Needless to say, the relative importance of each factor varies from state to state. Thus we need to rank them and concentrate more on crucial factors.

When you want to see where the new forces are generated, one way is to go fringes. At the outer edge are the ideas which the majority rejects. Albert Einstein was a patent clerk in Geneva who couldn’t get a university teaching job. The two “Steves” who founded Apple had roots, respectively, in Eastern mysticism and the “hacker” outlaw computer subculture.

Another way is to meet remarkable people. When you ask questions to youth, conventional thinkers and specialists, you’ll be able to understand more about the generating forces that will eventually shape the world.

To see the current situation, or the voice of the majority, the best ways are:

- See TV programs (not news), because they represent what people perceive and produce.
- Listen to popular music, because those songs show the public feeling
- Poll data also help us understand what people are thinking of
- Meeting people and asking questions help as well

Over the interaction between status quo and new forces, we see the breaking points, or perception-shaping events. For instance, global warming became the issue for millions of people, when a NASA meteorologist testified before Congress on long-term climate changes as the result of pollution in a slow news day. These perception-shaping events matter, because the changes in public perception can pivot the direction of history more swiftly and irrevocably than money or military power.

Critical uncertainties
Predetermined elements (driving force and status quo) are not enough to write scenario. In every plan, critical uncertainties exist. Scenario planners seek the critical uncertainties out to prepare for them. These critical uncertainties provide nodes for the scenario making trees.

3. Others
Let me share some interesting remarks that he made.

About network
Network exists thanks to generosity. The powerful network is created by powerful idea, strong relationship and generosity. It is fundamentally unique that being generous creates value and that some key driving force of the society exists thanks to generosity.

Future of lives
Biotech is making significant progress. In 20 years, 80 years-old people would look like 40s. We may be able to live longer than 200 years. This means that the timeframe of our lives will undergo dramatic changes. One initial but important advice is to choose spouses wisely.

Magazines worth reading as an information source
The Economist is in his opinion the single best source of information about what is happening in the world. The other good sources are Discover (science), Wired magazine (tech), Foreign Affairs (international relations), etc.

4. Remarks
I found that scenario writing is very akin to what investment professionals usually do in case analysis. When we make investment decisions, we come up with several cases to evaluate how the future could be and to see if we can manage even the worst situation. Investors’ case studies often are narrow-minded, and this book offers me a bird’s-eye view in scenario planning. As the interaction of various forces shapes the world, we ought to take more factors into consideration to prepare well for the future.

Peter Schwartz, “The Art of the Long View”, Crown Business (reprint edition), 1996/4/15

No comments: